Korean Job Discussion Forums

[SeoulNate]

Can anyone actually answer this question? I have heard everything from 2.0% to 3.3%. I know the national average for a Korean citizen is 3.3%, but from what i have experienced, it is different for E-2 workers.

I am writing the contact for the new teachers coming in and I want to make sure that I have this correct.

Definitive answers please.

Or an English speaking hotline I can call for the national tax service.

Thanks!

[ttompatz]

[SeoulNate]

Thanks!

That crap is confusing lol. It reminds me why I had someone do my taxes back home!

[ontheway]

[SeoulNate]

Another question:

What is 'Inhabitant's tax' ?

On the NTS website, it is listed at different for every city, but I have never heard of it before, and Seoul, being the largest city, should have the highest. Is it included in the taxes that we pay, or is it separate?

Thanks!

[OculisOrbis]

It's 10% of what you pay for income tax. So if your salary is 2.1 mil, your income tax withholding would be ~ 26 000w, your inhabitants tax would be ~2600W. I havent heard of it varying by region since the tax guide specifies that it is 10% of your income tax. Maybe the tax office adjusts it a little bit at settlement time based on your location, but the entire inhabitant tax is negligible to begin with so the variation is going to make almost no difference at all.

[SeoulNate]

thanks!

[SeoulNate]

One final question (hopefully)

After a one hour meeting, it comes out that they are trying to list the new teachers as Independent Contractors and thus will pay 3.3% tax.

Is this legal? I was under the assumption that we (E-2 visa workers) were not able to independent contractors.

Is there any ramification for the employee or the employer for registering an E-2 worker as such?

[ontheway]

It is perfectly legal to be an independent contractor on an E2 visa.

Your own situation depends on your contract.

Employee:

If your contract says that you are an "employee" then in almost every case you must be treated as an employee. This is especially true if your contract as an employee includes national health insurance and pension, then you are an employee. Your tax rate should be according to the NTS site and probably less than 2% (progressive tax). Use the link above to get the correct rate.

The best schools will use the word "employee" and have the correct pension, health insurance and tax rates according to the NTS in your employment contract and there will be no doubt.

These days most hogwans treat their teachers as employees and pay the proper health insurance and pension.

There is still confusion on taxes, but you can just show them the NTS site and they will change. Many schools have been misled by public accountants and tax office workers wrongly advising a 3.3% tax rate.


Independent Contractor:

If your contract says that you are an independent contractor, or uses the words contractor or teacher or some term, but does not state that you are an employee and if there is no mention of health insurance or it has health insurance that comes from a source other than the National Health Insurance Scheme, and there is no mention of pension, then you are probably an independent contractor. This is especially true for those who sign up for one of the hourly pay schemes instead of a monthly salary. If your employer plans to pay you as an Independent contractor a good clue is the 3.3% or 3.5% tax rate.

It is perfectly legal to be an independent contractor on an E2 visa. There is a significant percentage of such teachers.

Honest schools will want you to know that you are signing up as an hourly contractor or independent contractor and not as an employee and that you are not covered by pension or health ins, the tax rate is 3.3% etc. This prevents most battles that come later and means there is no possibility of a legal challenge.

If you are a legal independent contractor, the school must withhold 3.3% of your income for taxes and you are responsible to pay the full amounts for pension and health insurance yourself.

Being an independent contractor is a good deal for workers who teach at several locations for different schools. They only need to buy the health insurance once and while they do pay pension on the whole, they can get it all back. Such teachers can make more money by earning much higher hourly rates.

Some teachers think being an independent contractor is a good deal because they cannot get a refund on the pension anyway, so they just cheat and don't pay it.

If you can get a refund of your pension, then it is generally not a good choice if you teach at only one school - which is the case for most.


Uncertain:

If your contract does not state that you are an employee, but has a confusing mix of terms regarding health insurance and pension, then it could go either way if the contract has to go before some court or the pension, health or labor office. Such contracts often have a 3.3%, 3.5%, 5% or other ridiculously high tax rate listed.

These contracts are often used by dishonest schools that think hiding the truth is the only way to get a worker. Other schools just don't know that the words being used in the contract mean that their intent of hiring an independent contractor actually falls short of the legal standard.

Other schools, and even some public accountants still think that the 5 employee exemption is in effect, so they don't realize that the wording in their contract which would have exempted the employee from coverage no longer applies. Then they try to hide under the indpendent contractor rule, but cannot due to the incorrectly or vaguely worded contract.

[RMNC]

A+ post, ontheway. Right on the money.

[SeoulNate]

Excellent!

Well, looking over the new contracts, nowhere does it state teacher or contractor. They always refer to employee and employer.

If the school will not budge on the issue, who should I contact to resolve the issue? Tax office? Labor board?

[SeoulNate]

Damn, another round of talks today about the new contracts and more questions.

1. Same as the above question. The contract states employee and no where does it refer to the worker as subcontracted, independent or anything like that. However, they still are saying 3.3% on taxes as an independent contractor, is this legal if it is not stated in the contract? And where should I contact to get this resolved as the school seems clueless.

2. I believe this is related, but i am not too sure. They are not including pension with the payment in the new contract, however they are registering the new employees with the national health care system, how does this work, is it even possible to be in one and not the other? Is there any legal repercussion for the company to not enroll an employee (not independent contractor) in the pension fund?

I know there are problems if they take the 4.5% from you but do not actually contribute, but what if they do not enroll at all?

Thanks!

[OculisOrbis]

It's very simple.

They say, "Sign this, you will be an independent contractor" (so we dont have to pay your health or pension, but wont increase your pay to cover your, now, double payments and higher taxes).

You say, "No." "If you want me to sign, I will be an employee, you will pay 1/2 my pension and health insurance at the actual declared amount of my income and you will tax me at the proper employee rate. This all needs to be written in the contract."

They say, "That's not possible."

You say, "Goodbye."

[SeoulNate]

Okay lol, well i guess they wont be getting any new employees. That is more or less what i explained to them.

I am on the old contracts and i get my pension, heath care and so on. No idea why they are changing now.

[OculisOrbis]

They are collecting it from you, but are they paying it to the pension and health offices? Did they declare your actual income or did they under-report it so they pay less and still take the full amount from you and pocket the difference? Have they ever given you a pay statement, a health certificate or your tax settlement statement that shows how much of a refund you got that they didnt give you?

If you haven't checked into these things before, do it now. Their current trend of moving to blatantly screwing employees with mixed/confusing designations in the contract means they were likely not beyond screwing their current employees - just in a more insidious fashion that you may have not discovered yet.

I am willing to wager a beer that you are getting shafted too.